In a dual economy with limited currency convertibility:
A)both the traditional and international sectors tend to be dollarized.
B)only the traditional sector tends to be dollarized.
C)only the international sector tends to be dollarized.
D)neither the traditional nor the international sector tends to be dollarized.

Question

Quizplus · Accepted Answer

In a dual economy with limited currency convertibility, it is typically the international sector that tends to be dollarized. This is because the international sector engages in trade and transactions that often require or prefer a stable, widely accepted currency like the US dollar, especially in contexts where the local currency is not easily convertible on international markets. The traditional sector, which is more domestically oriented and less involved in international trade, is less likely to use a foreign currency like the US dollar for its transactions.

In a Dual Economy with Limited Currency Convertibility